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honest about problems with its vehicles or could there be more troubles ahead? >> we know bernankes plan to pull the plug on the emergency support programs for the financial market. >> the on line diamond business. how much does the future shine? it's all ahead on today's "first business." >> you're watching financial news. >> thanks for joining us. news of a potential bailout for greece could be coming, helping to stabilize the financial markets.
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the european summit is taking place thursday. we could hear developments on greece. >> the chicago auto show is getting underway. toyota is one of the headline stories that we are watching, including the possibility of the president of toyota coming to the united states sometime in march. we'll have to wait and see on that one. >> other than that, not much going on on capitol hill this week. washington, d.c. is digging out from the huge storm. hearings that were to be held this week have been pushed back, including toyota's massive recall. >> this week a class action lawsuit was filed against toyota on behalf of people who bought the stock. the suit alleges investors were misled when toyota failed to disclose an accelerator design defect. >> auto watchers are not so
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quick to turn away from the recall on prius 2010 models for brake problems and the sticky accelerator problem that prompted a recall. >> the japanese have a problem with that. i realize disclosure in japan are different, but in america, people expect the problem to be dealt with right away. >> the company stock is rattled by the recalls. a few months ago, toyota shares were riding high soaring from $56 to $91 by january of 2010. since toyota's recent troubles, the stock has slid to the 70's. morningstar has a four out of five star rating on the company. david whiston believes there is a limit to how far toyota stock
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will drop. >> i don't see the stock probably going much lower, maybe into the 60's at worst. it would concern me fit comes out that it's not a pedal and floor mat problem, but an electronics problem. >> toyota insists it has ruled out electronic problems, and has taken responsibility for the recalls, including by repairing the accelerator with a shim. >> they are producing shims as fast as they can. they're pressuring the distance between the pedal and pack brett and as as ishipping it up. >> lauren fix fierce there may be more bumps in the road ahead. >> there is a defense attorney who has 6,000 documents from 2004 to 2007. he claims there are coverups. we don't know until we view those documents. >> to it tase not out of the woods yet. there will be a massive class
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action settlement for billions of dollars juror toyota is said to be everything it can to remedy its vehicles and image with a u.s. quality control committee. toyota dealers are now more willing to come down on the prices of new models. the resail value on the cars in the recalls are said to be down 16% to 20%. the class action lawsuit valving shareholders includes people who purchased the stock between august 4, 2009, and february 2, 2010. >> coming up later in the show, beejal patel will have more on how to remedy the company's image. >> lets check on the financial markets now with richard ilczyszyn of waldock. does it seem stocks are stabilizing? >> absolutely. we are chopping coming into tuesday and wednesday with rumors with reference to germany
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possibly bailing out greece. that put us one way on wednesday's trade. statements out of bernanke saying that the fed may opt to discount rates sent the market the other way. a lot of the market is pricing in this action and we are stabilizing. >> the u.s. dollar is leveling off in recent days. u.s. pretty surery bond prices have been going down. >> trade is stabilizing. i think there may be more upside to the dollar at this point based on bernanke's statement that potentially we'll be raising rates in the future. i think that's something that we've all figured anyway. we know we can't be at discounted rates forever. people are going to want to get paid on treasuries and what not. i think the market is definitely reaching an end of that particular trade.
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>> the big question is when exactly will the fed raise rates. that's what no one seems to know yet. >> we can tell by the market nobody knows. up, down, sideways wednesday, and then the market closed just about unchanged. a lot of folks are on the lines sidelines waiting for this data. we are still talking about the euro zone. >> you've snow storms in washington wednesday faced the cancellation of a house committee hearing that likely bailed out better than bernanke from a grilling from congressman. that didn't stop him from releasing an exit strategy from their unprecedented intervention in the financial markets. >> we are beginning to see a very well defined plan. >> two facilities will be
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closed. it hinted at an increased spread between the feds fund rate and the discount rate, which is the rate at which banks borrow from the fed. also, adjusting interest rates paid on reserve it is held by the banks on the fed and not adjusting the feds fund rate may know because the main policy tool. >> the other question that remains unaddressed is when. that's key, because one of the major critique to the federal reserve has been the botched exit in 2003-2004 that according to many fostered the bubble housing that we experienced in 2005 and 2006. >> the announcement of the federal reserve's exit strategy, point to go higher interest rates down the line, contrast with suggestions by bank of england head. that central bank is considering adding more money to britain's
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struggling economy. >> coming up thursday, a snap shot of the job market with jobless claims. on the earnings front, quarterly reports from marriott, international and pepsi. >> just ahead of valentine's day, a look at the diamond business, and whether or not there is growth in the future. >> how much of a dent has massive recalls put in toyota reputation? that's next. @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
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8.5 million vehicles worldwide is among the largest in automotive history. some experts say the way toyota handled the situation seriously damaged the reputation of the world's biggest automakers. nick kalm is here to discuss the
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fallout. is it too late for damage control, since there's been recall after recall after recall. >> it's never too late, as long as there's a company and employees jobs to protect. the key is getting in front of it, which so far toyota has not done. >> let's talk about the strategy. what impression does that give you? >> either the company is trying to hide something, or it doesn't really know what it's doing. either way, that's not good for the customers, brand and reputation. >> we've seen the t.v. ads running from toyota apologizing for the recall. do you think the ads will work? >> no. the basic message of those ads is trust us. the way they've behaved since this problem first came to light suggest that is that trust of the people who put it in the
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company has been misplace jude there are two congressional hearings later no month, later in february. toyota definitely has allies in washington, lawmakers from states that have toyota plants. there are several of them. how do you think the hearings could come out? >> it could be difficult for toyota, depending how much people are trying to make hey out of these concerns happening, and every day the revelation of more problems with more cars. as long as this company is continuing to sell cars or trucks, all of which perhaps of suspect because of brake pedals, they've got a lot more to lose potentially. >> companies at the past have survived major recalls. it goes back to the 2000, when bridge stone had a recall all those faulty defective tires on the ford explorer. ford took a big hit back then, but 10 years later, it's recovered. can toyota recover? >> it can. one of the biggest differences
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in the situation is you had firestone and ford pointing fingers at one another. in this case, it's only toyota, and akin to the problem the audis had with sudden acceleration. >> do you think that is the problem with toyota? >> it is. they've got a very strong long standing reputation as a quality manufacturer. if they didn't have that, it would be a disaster. >> what is the lesson to be learned. >> we've seen this with clients. you can't operate in denial when you've got a problem. as soon as something comes to your attention, you need to get in front of it, uncover the aspects of it. everything that they're doing, it's to too little too late. >> what would you be doing right now? >> they are not having much in the way of conversation with their customers in the social
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media or elsewhere. it's surprising that they're not. in they're outbound communication, they're saying trust us, we're ahead of it, but they have gaping holes. that begs the question what problems don't you know of. it shows they are not getting a handle on it. what are they hearing and saying, what are they hearing from customers. there are very devoted loyal toyota and lexus customers that are wondering should i put my family behind the wheel of those things. they quantify that this as a $2 billion direct cost hit. how much are they going to learn in brand and reputation. >> is it true that eventually people forget about these things? >> they do, but the audi example was from 1984. it's 2010. those things linger for a while. some people say i'm not going to
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consider the audi brand because of the acceleration problem, and that's been fixed for more than 20 years. >> thank you. >> my pleasure. >> straight ahead, can a diamond retailer cash in just ahead of valentine's day? that's next. it's a revolution in pain relief.
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diamond and jewelry business that's actually survived the recession, but is the future still bright? brian bolan is here to break down the numbers on blue nile. welcome back, brian. >> thanks for having me. >> the stock is under $50, but the price earnings multiple is like $68. it's aggressive. what are you expecting from earnings? >> i think in this particular earnings that are coming out today after they close, i assume the revenue is going to be 106 million consensus on the top line. i would expect a bead on the bottom line, but coming in soft on the top line. >> valentine's day is coming up. >> i think blue nile will benefit from that. my in box has been receiving special offers from them. valentine's day is in the first quarter of 2010, to we aren't
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going to see the benefit for several months. >> net sales for blue nile are down almost 5% for the first 10 months of 2009 versus the first 10 months of 2008. because of a decrease in orders, how much growth could blue nile see, especially given the fact that consumers are not likely to spend money on unnecessary items. >> the growth has been moderate, not stellar or outstanding like an internet stock you would assume. purchasing things from blue nile, people are still getting engaged and married. you can't put that off forever, although i've tried personally. >> i've tried, too, as well. >> you have to do it at some point, if you're under pressure at all from your significant other. diamond purchases do happen. it's just the price at which you buy them are coming down or at least were coming down over the
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last several months. >> at $68, that's pretty high, it seems. >> it's a rich multiple. it is a difficult thing to get your arms around, especially as a small investor trying to buy the stock. institutions own roughly 95% of this so it's pretty well entrenched. >> the other head winds facing blue nile, rising commodity prices. gold and silver have been skyrocketing. in the face of lower sales, that can't go a good thing for blue nile. >> you would think it would hurt them, but the prizes for the metals are built into the cost. the consumers are paying for that. blue nile will purchase something and act as an agent. a consumer will buy something on the website, blue nile will then buy that and allocate the cost accordingly. >> for a one carat diamond, back
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in 2009, $4,500 worth, today $5,500. what do you attribute that rise to? >> demand has come back. diamond prices were falling, and falling pretty significantly through the recession. over the last several months, we've seen strength come back. as there are signs of hope in the recovery in the economy, people are going out and buying engagement rings or splurging on more expensive diamond rings. >> we are still reluctant to spend. what do you think the growth is going to be in the future for the on line diamond business? >> i would imagine that the larger purchases are going to be there, butle smaller purchases are what's really going to drive blue nile. i think people have a hard time wrapping their head around spending $15,000 on a diamond ring that they've never even seen, even though they've seen
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similar things at other jeweler was. i think the smaller things will drive them. >> thank you very much. brian bolan, independent analyst. >> thanks for having me. >> coming up next, a trader
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talks about what's troubling the market. to help my patients avoid dental problems
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i recommend act fluoride mouthwash. act works with calcium to rebuild enamel. to avoid dental problems act daily. michael palmer joins us. he's with group one. good morning to you. >> good morning. >> as you know, we've been going
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through this earnings season. what do you think about the earnings so far. is the market paying attention? >> there's a muted response to earnings results. we've seen generally on par what we expect or even better earnings than what we would expect. in reality, the market is paying attention to more mack crow issues, especially the euro zone area. >> are you surprised with the news that greece will get a bailout, that the vix hasn't budged much? >> i'm not, actually. this seem be to the level at which customers are comfortable buying or selling options, right in this marketplace. >> do you feel like there's still a loft uncertainty in this market, and they are going to continue to watch the macro issues? >> that seems to abpossibility going forward.
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if it seems that the euro is not going to be a big deal as people feared, i think the results of various companies will peer into the market as volatility goes down. >> do you think we're more likely to see a breakout or break down? >> i think it depends on what that is in europe. we won't be here in six weeks. we're going lower or higher, but we're not going to be right here. >> there's going to be trauma in the markets going forward, it sounds like. pleasure speaking with you today. >> we hope you enjoyed today's show. coming up friday morning, it's our viewer mail segment. send us your calls or emails. contact us at 312-660-8397 or contact us at
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thanks, everyone, we'll see you tomorrow.
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First Business
FOX February 11, 2010 4:30am-5:00am EST

News/Business. (2010) An IRS expert provides tips for filing taxes. New. (CC)

TOPIC FREQUENCY Toyota 22, Nile 8, Us 5, Greece 4, U.s. 3, Washington 3, Valentine 2, Brian Bolan 2, Chicago 1, Brett 1, Michael Palmer 1, Waldock 1, Beejal Patel 1, D.c. 1, Lauren 1, Bernankes 1, David Whiston 1, Us At 1, United States 1, Audi 1
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